Capitalism Under Assault

The system is busted. That much is clear. Now many people are experimenting with alternatives. Roberto Mangabeira Unger has long been one of those on the cutting edge of fundamental reform. Finally he has the chance to change the course of history.

Not long ago, Roberto Mangabeira Unger was leading a life of academic stardom, working as a professor at Harvard Law School. The 60-year-old had first joined the faculty at age 24. By 29, he became one of the youngest tenured professors in the school's history. His prominence expanded far beyond the field of law. Unger wrote prodigiously, churning out an endless stream of ideas about philosophy, politics, economics and social theory. He was, and he remains, a committed, radical leftist; he embraces the very idea of radicalism as a central pillar of his political philosophy.

But now Unger has the chance to change history's course. The Rio de Janeiro native was appointed last summer to be a minister in the government of Brazil. He has long been a critic of Brazil's various governing regimes, including that of the man who appointed him, President Luiz Inácio Lula da Silva. But now Unger is working from within government, instead of as an outsider. He will be the minister for strategic affairs – a job many call the "Minister of Ideas." The question is whether his ideas will survive the cut and thrust of governmental politics, or be rendered as merely – in the most belittling sense of the word – academic.

Unger is more than just another academic-turned-politician, or another radical given a taste of power. His success or failure may very well determine the future of leftist movements around the world. His ideas represent some of the most novel approaches to dealing with the world's problems: how to reduce poverty, promote economic growth and strengthen democracy. So his appointment will test whether a leftist movement still has the power to transform the world.

By now, the war of ideologies has been won. Communism is dead in all but a few isolated pockets. Governments have largely acquiesced to the dictates of free market economics. Yet neoliberalism and the economic growth it's supposed to bring will not by themselves lift people out of poverty. And so the range of ideological possibilities has narrowed to a small spectrum within the realm of neoliberalism lite: free markets, but with a degree of social programs in place. The age of grand social experiments is over.

These are blinders that Unger refuses to wear. He rejects what he calls the "shrunken pragmatism" that has stifled debate. He argues passionately for alternatives, even against the growing consensus of people who say there are none. He also rails against the leftist model of his neighbor, the petro-dollar-fueled Venezuela, as well as that of the comfortable social democracies of Western Europe. It's not enough, Unger argues, to take money from neoliberalism's winners to buy social programs that aid its losers. There need to be deeper changes that make the market's benefits more inclusive. He believes there are still new ideas to be explored; indeed, these are the only hope for progress.

Unger's vision is what he calls "radical pragmatism." The shrunken pragmatism that's in vogue these days rejects the idea that there's some universal truth to guide our path to progress. There is no ideological holy grail. But Unger argues that this viewpoint makes it all too easy to turn our backs on new ideas. Chastened by the failures of bold transformations, societies come to believe that the status quo is an inescapable fate. "It is only by crazed ambition, perpetually arising from entrenched features of our situation, that we set our sights on distant objects," Unger writes in his most recent book, The Self Awakened: Pragmatism Unbound. Perhaps there is no preordained ideology to follow, but we must still unleash our creativity.

Instead of a tiny business elite dropping crumbs for the country's poor, a broad middle class of small business entrepreneurs would form Brazil's engine of growth.

Some of Unger's most revolutionary thoughts relate to the economy. For years, developing countries, and particularly those in South America, followed the prescriptions of lending bodies like the World Bank and the IMF. Social programs were scrapped, industries were privatized, and foreign trade and investment were encouraged to grow the economy. These measures made a small class of business people extraordinarily wealthy, while doing little but add pain for the poverty-stricken silent majority. And yet the agenda never brought about the sustained economic growth it was supposed to provide. Countries that ignored mainstream liberalization polices, like South Korea, Taiwan and Thailand, achieved remarkable growth, while Argentina faithfully followed the liberalization path to the brink of economic collapse.

Still, one shouldn't get too nostalgic for the pre-liberalization days. Governments overspent, sending debt and inflation spiraling. Hyperinflation robbed people of their savings. State industries were grossly inefficient and corrupt – vital transportation, sanitation and telecommunications services suffered. No, salvation for the poor isn't going to come from big government, nor from big corporations. Salvation, Unger proposes, must come from Brazil's average citizens.

Unger rejects the paths that South Korea and China took to success. South Korea turned itself into an export machine by building around its big industries. The government gave exporters access to low-interest bank loans, money from foreign lenders and preferential tax rates. Meanwhile, Korea's currency was devalued to make its exports attractive to foreign buyers. China, on the other hand, harnessed its vast pool of cheap labor to become the world's factory floor.

But Unger doesn't think Brazil should compete against the likes of China by giving its workers ever-lower wages. And he rejects the neo-Korean model because he wants to start an economic revolution from the ground up, not top down. Instead, Unger proposes that the government both tax and invest heavily. Voting should be made mandatory, as should savings. These measures would buffer the economy from the influence of international investors. This flies against the textbooks that say governments should prostrate themselves to foreign investment. Growth would not come from big business then, but from Brazil's small enterprises. Instead of a tiny business elite dropping crumbs for the country's poor, a broad middle class of small business entrepreneurs would form Brazil's engine of growth. These small enterprises would get access to the credit and tax benefits that big businesses more typically enjoy. The benefits of the market should be shared broadly, not monopolized by big business.

In a way, the idea is very much free-market orthodoxy. Economic decisions would be made on a smaller, more local scale. Individuals know what's best for themselves and should be encouraged to pursue their own self interest. Why should people cede control of their own destinies to large, distant institutions, be they government, corporations or the World Bank? By giving individuals the tools and freedom to succeed, they can take charge of their own prosperity.

The test for Unger is not only whether his ideas will succeed in the real world, but also whether they will be implemented in the first place. Politics has a way of hammering down the nail that sticks out the highest. Bold ideas that are nurtured in academia get watered down with compromise. But Unger's appointment is the brightest hope in recent years that a new vision can transform the world. Brazil is an experiment worth watching.